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Iraq's oil surplus fuels criticism in war hearings

  • Story Highlights
  • Pentagon: Rising oil prices result in a $6.4 billion surplus for the Iraqi government
  • The Iraq war's cost to U.S. taxpayers is estimated at more than $600 billion
  • Lawmaker proposes Iraq should pay the cost of stationing U.S. troops
  • Ambassador: "The era of U.S.-funded major infrastructure projects is over"
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WASHINGTON (CNN) -- With U.S. gasoline prices setting records, opponents of the war in Iraq have raised a new complaint this week: The budget windfall that skyrocketing oil prices has given Baghdad.

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Iraqi employees attend the opening ceremony of a new oil refinery plant in Najaf, Iraq, on March 15.

Crude oil futures topped $112 a barrel in Wednesday's intraday trading in New York -- up from about $35 a barrel before the 2003 invasion of Iraq.

Though Iraq's oil exports have yet to top prewar levels, the price rise has meant a $6.4 billion surplus for the Iraqi government, according to the Pentagon's last quarterly report on the war.

With the five-year-old war's cost to U.S. taxpayers estimated at more than $600 billion, the Iraqi windfall provoked sharp questions from Congress during two days of testimony by the top U.S. officials in Iraq, Gen. David Petraeus and Ambassador Ryan Crocker.

"This nation's facing record deficits, and the Iraqis have translated their oil revenues into budget surpluses rather than effective services," Rep. Ike Skelton of Missouri, the Democratic chairman of the House Armed Services Committee, said Wednesday.

"Under these circumstances and with a strategic risk to our nation and our military readiness, we and the American people must ask: Why should we stay in Iraq in large numbers?"

Rep. Dana Rohrabacher, R-California, proposed the Iraqi government pay the cost of stationing U.S. troops in its country under any future agreement between Washington and Baghdad -- and said he would introduce legislation to require that.

"The United States government and the people of the United States have paid an awful price," Rohrabacher said. "It's time for the Iraqis to pay that price for their own protection."

Crocker said Iraq has allocated $13 billion for reconstruction projects in 2008 and plans to add another $5 billion this summer. The U.S. focus will shift to improving Iraq's economy at the local level and expanding its export capacity, he said.

"The era of U.S.-funded major infrastructure projects is over. We are seeking to ensure that our assistance, in partnership with the Iraqis, leverages Iraq's own resources," he said.

Five years after Baghdad fell to a U.S.-led army, many Iraqis still lack basic services such as water, sewer connections and electricity. Nevertheless, Foreign Minister Hoshyar Zebari said the government is "doing its best" to spend money to improve the country.

"I think the government has a responsibility, definitely, to care for its people, to provide services and to use the oil money for reconstruction and development," Zebari said.

The United States has committed about $45 billion to Iraq's reconstruction since the March 2003 invasion, according to a report last month from the Government Accountability Office.

The agency, the investigative arm of Congress, concluded that Iraq's oil revenues could top $100 billion in 2007 and 2008.

When President Bush announced he was dispatching almost 30,000 additional U.S. troops to Iraq in January 2007, he told Americans that Iraqis would spend $10 billion on reconstruction projects and pass a law allocating the country's oil wealth as steps toward a political settlement of the war.

The GAO, however, found Iraq had spent only 7 percent of that budget by November 2007, and the proposed oil law has stalled in the country's fractious parliament.

Deputy Prime Minister Barham Saleh blamed the ongoing insurgency and the "socialist command economy" left behind by ousted dictator Saddam Hussein for the slow pace of reconstruction.

"At the time we were trying to reform it, open up the system, when we are faced with the terrible challenge of al Qaeda and this tornado of terrorism afflicting the society day in, day out," Saleh said. "People should not be too judgmental."

But Sen. Claire McCaskill, D-Missouri, said Tuesday the issue is "a burr in the saddle of the American people" -- particularly since Bush administration officials told Congress before the invasion that Iraq could finance its own reconstruction with oil revenues.

Rep. Walter Jones of North Carolina -- a Republican opponent of the war -- pointed out the United States "is borrowing money from foreign governments to pay our bills" while oil and gas prices have more than doubled.

"The issue is that we in this Congress are going to be cutting programs to help our elderly with health care," he said Wednesday.

"The American people want to know that the Iraqi government understands that we do not have treasure and blood to go on and on and on." E-mail to a friend E-mail to a friend

CNN's Jill Dougherty in Baghdad contributed to this report.

All About Oil PricesIraq WarDavid PetraeusU.S. Government Accountability Office

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